Bribery in international business has become a priority concern among business, government, and community leaders. While discussions among philosophers often emphasize the ethical justification for banning bribery, policy-makers around the world are challenging it on the basis of its effects for economic development. In this paper we define bribery, trace recent efforts by the public, private, and civil society sectors to curb it, and attempt to answer the question: Will bribery become less common?

Globalization leads to cross-border business transactions between societies with very different norms and regulations regarding bribery. Bribery in international business transactions can be seen as a function of not only the demand for such bribes in different countries, but the supply, or willingness to provide bribes by multinational firms and their representatives. This study addresses the propensity of firms from 30 different countries to engage in international bribery. The study incorporates both domestic (economic development, culture, and domestic corruption in the (...) supplying country) and international factors (those countries' patterns of trade and involvement in international accords) in explaining the willingness to bribe abroad. The propensity to provide bribes was the lowest when corruption was not tolerated in the multinational firms' home countries, when the firms' countries were signatories of the Organization for Economic Cooperation and Development (OECD) anti-bribery convention, and when those countries traded heavily with wealthier nations. Further, these findings are maintained when controlling for levels of economic development and cultural values in the supplying country. In terms of culture, firms from high power distance countries showed a somewhat greater propensity for providing bribes in transactions with less-developed nations. (shrink)

Our paper draws attention to a neglected channel of corruption—the bribe payments by state-owned enterprises. This is an important phenomenon as bribe payments by SOEs fruitlessly waste national resources, compromising public welfare and national prosperity. Using a large dataset of 30,249 firms from 50 countries, we show that, in general, SOEs are less likely to pay bribes for achieving organizational objectives owing to their political connectivity. However, in deteriorated institutional environments, SOEs may be subjected to potential managerial rent-seeking behaviors, which (...) disproportionately increase SOE bribe propensity relative to privately owned enterprises. Specifically, our findings highlight the importance of fostering democracy and rule of law, reducing prevalence of corruption and shortening power distance in reducing the incidence of SOE bribery. (shrink)

Following corporate accounting scandals there has been an increasing concern with understanding the factors that undermine the occupational values of accounting professionals, which emphasize self-transcendence in the pursuit of public good and openness to change in the pursuit of autonomy and creativity. Prior studies have demonstrated that these values are undermined in economically rationalized organizational environments. Our study advances this research by examining how accounting professionals’ occupational values are influenced by the economic rationalization of countries where they are employed. While (...) economic rationalization of countries is recognized as a key macrostructural, social-level influence on individual values, the theory is divided regarding its normative effects. While economic rationalization may decrease the priority of occupational values by transforming professional action in accordance with the calculative logic of economic rationality, it can also increase the priority of these values by providing resources necessary for freeing professionals from the material constraints of survival. We test these divergent insights using the European Social Survey data for 28 countries. Our results indicate that economic rationalization decrease accountants’ occupational values beyond the effects of cultural values and work-related characteristics. (shrink)

This study focuses on the differences in the perception of business ethics across two groups of management students from France and Romania (n = 220). Data was collected via the ATBEQ to measure preferences for three business philosophies: Machiavellianism, Social Darwinism, and Moral Objectivism. The results show that Romanian students present more favorable attitudes toward Machiavellianism than French students; whereas, French students valued Social Darwinism and Moral Objectivism more highly. For Machiavellianism and Moral Objectivism the results are consistent with the (...) literature and our hypotheses. However, contrary to our expectations, we find that Social Darwinism is more important in France than Romania. The results indicate that religious practice does not influence preferences for the three business philosophies. In terms of gender differences, women have less favorable attitudes toward Machiavellianism and more favorable attitudes toward Moral Objectivism than men. (shrink)

The aim of this Web-based survey of 15 German companies with an international profile was to identify which higher-level values serve as a basis for a company culture that promotes integrity and can thereby also be used to promote crime prevention. Results on about 2000 managers in German parent companies and almost 600 managers in Central and North European branch offices show that a major preventive role can be assigned to a company culture that promotes integrity. This requires a ‘tone (...) from the top’, ‘ethical leadership’ from the direct superior, and a general set of values that can be encouraged through training courses. Moreover, employees have to perceive these values as promoting their careers. The survey reveals that the companies in this study have basically succeeded in establishing their system of values in their Central and North European as well as their Asian branch offices. Moreover, it shows that the main values preventing crime on the management level are trustworthiness and consistency. Open communication is an important value on all levels of a company, and this is supplemented by transparency, compliance with the rules, and a rejection of behaving in one’s own interest. It is concluded that in spite of regional differences, major international companies can possibly make an important contribution to bringing about cultural change in regions with an affinity for corruption by implementing a culture that promotes integrity in both their company and their daily business. (shrink)

Corporate social responsibility (CSR) is a relatively undeveloped concept despite its increasing importance to corporations. One difficulty is the possible inexactness of CSR. Another is the apparent reluctance by regulatory authorities and policy makers to intervene in the area. This is largely a result of inhibitions created by traditional approaches to company law with emphasis on shareholder protection and financial disclosure. The consequence is the stultification of independent development of CSR by tying social issues to financial performance. This attitude might (...) not be unconnected to the theoretical and practical challenges in justifying CSR and defining its scope. The underlying impediment is a factual and theoretical failure to distinguish ‘instrumental’ and ‘pure’ (ethical) CSR. This article demonstrates that ethical CSR highlights the role of regulation, and a principal stance is that regulation is neither incompatible nor irreconcilable with ethical CSR. The article argues that cognizance of the intrinsic moral justification of ‘pure’ CSR is required for delineating the scope of CSR as well as for clarifying the desirability and extent of its regulation. It argues that the dynamic history and visage of multinational corporate corruption illuminates the fluidity of the regulation–CSR relationship. The current and widening backlash against transnational corporate corruption is, arguably, a demonstration of the position that regulation and CSR are not mutually exclusive and absolute concepts. This article submits that recognition and application of this ‘ethical’ and ‘instrumental’ CSR distinction is fundamental to the development of CSR and resolution of connected questions of regulation. (shrink)

In global business, business organizations and their representatives frequently encounter corruption and may be the perpetrators, victims, or simply participants in such acts. While international corruption has existed in multiple forms for several years, many individuals, companies, nations, and international organizations are currently attempting to reduce or eliminate corrupt acts because of their harmful effects on local economies and the quality of life of citizens. Several of these corruption curtailment efforts have been directed toward the supply-side of corruption, i.e., those (...) who make corrupt payments. In developing an understanding of corruption, however, and formulating strategies for its reduction, consideration must also be given to the demand-side of corruption, i.e., those who demand and accept corrupt payments. Accordingly, this study examined the demand-side of corruption and several related factors in the categories of government, economy and poverty, education, geography, and culture. Analysis of these factors employed the Corruption Perceptions Index (CPI), formulated annually by Transparency International (TI), and other sources. Several factors in each of the five categories were found to correlate significantly with perceived corruption, and strategies for addressing these issues were developed and discussed. (shrink)

This article examines the proposition that a major cause of the major financial accounting scandals that received much publicity around the world was unethical leadership in the companies and compares the role of unethical leaders in a variety of scenarios. Through the use of computer simulation models, it shows how a combination of CEO's narcissism, financial incentive, shareholders' expectations and subordinate silence as well as CEO's dishonesty can do much to explain some of the findings highlighted in recent high profile (...) financial accounting scandals. Furthermore, it shows that the nature and impact of ethical leadership depends greatly on the institutional setting and can be expected to vary greatly by country and culture. In certain circumstances ethical leadership can have either a negligible or even opposite effect to that expected. (shrink)

The expansion of international trade and global business competition in recent years has been accompanied by growth in corruption. While many factors may contribute to a person's willingness to participate in a corrupt transaction, the influence of religion may be significant, and leaders of religious organizations have become increasingly vocal in their condemnation of corruption. As honesty and fairness to third parties is universal to many religions, leaders of many faiths are united in their opposition to corruption. To better comprehend (...) the relationship between religion and corruption, a study was conducted employing information related to religion and Transparency International's Corruption Perceptions Index (CPI), which ranks nations according to the perceived degree of corruption among public officials and politicians. The 133 countries that were included in the 2003 CPI were compared across a range of factors related to 1) the dominant religion practiced in each country, 2) perceived corruption, 3) the importance of religion to the citizens of each country, 4) religious freedom, and 5) the gross domestic product (GDP) per capita. Study results indicate that, when countries are grouped by dominant religion, the groups differ significantly with regard to perceived corruption, value of religion, religious freedom, and GDP per capita. Significant differences in the same factors also occurred when countries were grouped by corruption levels. (shrink)

In this paper, we argue that corruption research can benefit from studying corrupt transactions as a particular form of social interaction. We showcase the usefulness of a theoretical focus on social interaction by investigating online user reports on the website Frontdesktip.com. Through this focus, we can observe users sharing experiences and tips on the best ways of bribing hotel clerks in Las Vegas for attaining room upgrades and other complimentary extras. We employ a logistic regression analysis to examine what factors (...) influence the “successful” performance of this bribery practice. Our study makes a twofold contribution to existing research on corruption. First, on the theoretical level, we show that the typified and scripted character of social interactions can help explain the occurrence of corrupt transactions. Second, on a methodological level, our study showcases online self-reports as a useful data source to study corrupt transactions in an unobtrusive way. (shrink)

Although corruption is ubiquitous, attitudes toward it differ among countries. Until the 1997 OECD Convention, the U.S. had been one of the only two countries with an explicit extraterritorial anti-bribery law, the Foreign Corrupt Practices Act (FCPA) of 1977. The FCPA employs a two-pronged approach to control the supply side of corruption: (1) anti-bribery provisions; and (2) accounting (books and record and internal controls) provisions. I offer evidence, albeit indirect, to show that the FCPA had limited success. The OECD Convention (...) adopts the same two-pronged approach, but, since it is a multilateral treaty, is likely to be more successful provided that enforcement is vigorous enough. The signatory nations effectively form a cartel to reduce the cost of doing business. As with any cartel, however, each multinational corporation has an incentive to deviate. Thus, the mutual enforcement of the agreement is crucial for its success. However, the two-pronged approach is not sufficient, since internal control does not adequately monitor decisions made at the top level. I argue that the two lessons drawn from the U.S. experience are: (1) law enforcement must be credible; and (2) internal controls alone are not sufficient. Stronger and more effective corporate governance within an appropriate regulatory framework is needed to ensure that multinational corporations conduct their business in an ethical manner. (shrink)

We examine how corporate bribery is impacted by cultural distance between multinational enterprises home and host countries, and organizational distance to core values between MNE entry modes and MNE headquarters. Tension between external and internal legitimacy helps to explain why cultural and organizational distances will affect MNE bribery. The empirical analysis used data from cross-border transactions by MNEs that were sanctioned by US regulatory officials between 1978 and 2011. We find statistical support for all hypotheses capturing main and moderating effects (...) and suggest that MNEs may be seriously risking their legitimacies from transactions in corruption-prone host countries. (shrink)

Economic openness, both in terms of increased international trade exposure and enhanced inter-firm networking, has been a key element of China’s economic emergence since the implementation of market reforms and the “opening-up policy” over 30 years ago. Unfortunately, these changes have also coincided with the increased incidence of bribery and corruption. Both in general, and in the specific context of China, research on the relationship between a firm’s tendency toward openness and its propensity to engage in bribery is scarce. This (...) study seeks to fill this gap based on empirical evidence provided by a large sample of Chinese firms. The findings of the study reveal that firms’ increased networking and openness tend to occur contemporaneously with greater bribery and corruption. We suggest that this may be due to the misuse of guanxi-based networks that coincide with the presence of firms’ open network strategies, heightened by the potential loss of resource and capability heterogeneity (and hence reduced competitive advantages) in the context of openness. We further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development. (shrink)

A number of studies have investigated and found a significant relationship among economic wealth, Hofstede’s national culture dimensions, and software piracy rates (SPR). No study, however, has examined the relationship between economic wealth, culture, and the fact that national SPRs have been declining steadily since 1994. Using a larger sample than has previously been available (57 countries), we confirm the expected negative relationship between economic wealth, culture (individualism and masculinity) and levels of software piracy. The rate of decline in software (...) piracy, however, is found to be a cultural phenomenon, with two factors (power distance (PDI) and uncertainty avoidance (UAI)) working in opposition. Similar results are found for a subset of 37 relatively poor countries. This suggests that, while the rise in economic wealth seen for most countries should lead to a reduction in software piracy, the rate of decline is determined by cultural factors. Global strategies for dealing with software piracy are discussed. (shrink)

As multinational firms explore new and promising national markets two of the most crucial elements in the strategic decision regarding market-entry are the level of corruption and existing trade barriers. One form of corruption that is crucially important to firms is the theft of intellectual property. In particular, software piracy has become a hotly debated topic due to the deep costs and vast levels of piracy around the world. The purpose of this paper is to assess how laissez-faire trade policies (...) and corruption affect national software piracy rates. Using invisible hand theory, as well as literature from the fields of international strategy and ethics, formal research hypotheses are posited and tested. Results suggest that corruption mediates the relationship between economic freedom and software piracy. Implications for multinational managers and researchers are also addressed. (shrink)

Recent research suggests that collectivism breeds corruption in bank lending. This finding, together with the stickiness of culture, poses a direct challenge to economic growth in collectivist societies. In this paper, we address this grim outlook by examining the types of firms that are susceptible to the detrimental effect of collectivism on lending integrity and the formal institutions that can help alleviate such effect. We find that the adverse effect of collectivism on bank corruption is more severe in small and (...) medium-sized firms, privately owned firms, and non-exporting firms, while it is considerably weaker in countries with more effective private monitoring, a higher fraction of foreign-owned banks, a more competitive banking sector, better information sharing, and stronger legal and political institutions. Our findings are robust to using alternative measures of collectivism and alternative dependent variables. These results highlight how firm-level characteristics and formal institutions interact with collectivism in affecting firms’ access to bank credit. (shrink)

This article studies the effects of social institutions on organizational corruption at the societal level by focusing on the possible interactions between the institutional pillars that have been identified in past research. Based on these three institutional aspects or pillars, this article tests the interactive effects of social institutions among societies throughout the world. The results suggest that the three institutional pillars have significant interactive effects on organizational corruption at the societal level. A discussion of the implications of the research (...) findings for researchers and practitioners is given. (shrink)

In this paper I analyze representations of scholarly output for the purpose of identifying corrupt practices. Accordingly, the components of output—price, quantity, and time—are examined. A key part of the analysis is recognizing the unique role that the scholarly community plays in scholarship and the implications this has for the roles of groups other than the scholarly community. Finally, a survey of students indicates that particular representations of scholarly output are viewed by students as unethical.

Three strategies for developing just and consistent global business practices are examined: 1) international treaties and agreements, 2) global codes of business conduct, and 3) voluntary self-restraint. International agreements investigated are: NAFTA, Global Warming Treaty, OECD Anti-Bribery Treaty and Infant Formula Agreement. The codes examined are the Caux Round Table’s Principles for Business, The Global Sullivan Principles and The United Nations Global Compact with Business. Each of these three strategies is probed for its relative strengths and weaknesses, and its prospects (...) for developing ethical business practices—especially in the areas of improving the environment, human rights and working conditions. (shrink)

The economic globalization process has integrated different competitive markets and pushes firms in different countries to improve their managerial and operational efficiencies. Given the recent empirical evidence for the benefits to firms and stakeholders of good corporate governance (CG) practice, it is expected that good CG practice would be a common strategy for firms in different countries to meet the increasingly intense competition; however, this is not the case. This study examines the differences in CG practices in firms across different (...) countries using the concept of ethical sensitivity. Through the regression analysis of 271 firms in 12 countries and regions, it is found that Hofstede’s cultural dimensions can explain the differences in CG practices. Furthermore, the results demonstrate the influence of culture on ethical sensitivity, which eventually determines the CG practices in different regions. (shrink)

This study examines the impact of culture on regulation and corruption. Our empirical results suggest that cultural values have significant effects on countries’ regulatory policies, levels of corruption, and economic development. Contrary to the conclusions drawn by others, this study shows no significant relationship between the regulatory policies of countries and their perceived levels of corruption. Thus, evidence of the “public choice view” toward entry regulation derived in related studies seems to be at least attenuated.

Non-domestic companies are increasingly present on the London Stock Exchange. Such companies have specific governance requirements. They may seek to access capital in a more liquid market and to diversify ownership. The reputational ‘bonding’ to a prestigious exchange should be a statement to the market of a propensity to disclosure and a willingness to protect minority shareholders. Yet, many non-domestic companies retain tightly controlled shareholding structures and are based in emerging regions where national culture norms differ to the UK. We (...) hypothesise that non-domestic companies are likely to be less compliant with the principles of the UK Corporate Governance Code and suggest a correlation between lower levels of compliance and non-domestic companies from countries that demonstrate high power distance in the Hofstede cultural value framework. We find some encouraging signs of compliance with the reigning governance code principles in Board structures. However, we find only partial compliance in leadership and Board effectiveness measures in those companies from cultures high on the power-distance scale. Further, we include analysis into ownership characteristics and find companies from emerging markets are dominated by a single or controlling group of shareholders, which is likely to impact on attitudes to compliance and is particularly evidenced in terms of Board structures with no executive directors or led by an executive Chairman. Much of the prior research effort into the levels of compliance with the UK’s ‘comply-or-explain’ approach to governance has produced mixed results and focused on all companies. In our exploratory approach to analysing only the non-domestic subsample, we report some evidence linking cultural distance to lower levels of compliance with the UK standards. We develop a framework to guide future research into the context and cultural underpinnings of this sub-sample of companies, hypothesising that frequent market capitalisation-induced index changes may divert attention away from any potential compliance issues. On the one hand, our evidence is encouraging for governance regimes based on voluntary compliance disclosures such as the UK and similar European and international markets, as we report partial compliance with the principles of the current governance code. Our research may, however, be helpful in guiding future versions of the UK governance framework and other international governance regimes adopting the ‘comply-or-explain’ approach and in setting policy to improve disclosure. It contributes to the understanding of the specific context of non-domestic companies and any cultural tendencies to non-compliance. By demonstrating evidence of lower levels of compliance with key principles of the Code by non-domestic companies, we present a framework enabling lawmakers to further improve corporate governance codes. (shrink)

Disparity in consumer ethics reflects cultural variations; these are differences in the collective programming of the mind that distinguishes one culture from another. This study explores the differences in consumer ethics across cultural dimensions using Hofstede's (in Culture's consequences: international differences in work-related values, Sage, Beverly Hills, 1980) model (collectivism, masculinity, power distance, and uncertainty avoidance) and Muncy and Vitell (in J Bus Res 24(4): 297-311, 1992) consumer ethics model (i.e., illegal, active, passive, and no harm). This is the first (...) study to empirically explore consumer ethics using these two major constructs. Seven hundred sixty one African American consumers were used to test the four major hypotheses developed in this study. Current research has revealed that there are significant differences in ethics between consumers who score high and consumers who score low on Hofstede's four cultural dimensions. In general, this research revealed that consumers who score high on collectivism, high on uncertainty avoidance, low on masculinity, and low on power distance scales reject questionable activities more than consumers who score low on collectivism, low on uncertainty avoidance, high on masculinity, and high on power distance. This study should prove valuable to international marketers because the Hofstede cultural model allows managers to identify differences in consumer ethics across different cultures and thus provides a theoretical base for designing effective marketing strategies. (shrink)